Sickle cell disease is a genetic blood disorder whereby “normal” red blood cells (donut shaped) that flow freely through the veins are deformed and assume the shape of sickles or spurs. The sickling of the red blood cells causes them to attach to the walls of small blood vessels and to obstruct blood flow, which limits critical oxygen delivery to tissues. The disease is very painful, it decreases the life expectancy by 25-30 years, and predominantly affects African Americans, Arabs, Greeks, Italians, Latin Americans, and people native to India. Myelodysplastic syndrome is a collection of disorders in which the bone marrow does not produce enough blood cells. Scientists have determined that this disease is not an inherited disease but an acquired disease. However, like SCD there is no known cure. Normally, the bone marrow produces three major types of blood cells: red blood cells, white blood cells and platelets. In patients with MDS, this production process breaks down. Blood cells do not develop properly, and as a result, there is a lack of healthy blood cells in the body. The average age of a MDS patient is 60 years old and the disease primarily occurs in males. Once diagnosed, the life expectancy rate is between 2-10 years. Currently there are three (3) options for treatment of MDS. They include (1) supportive care, (2) low intensity therapy and (3) high intensity therapy.

SCTI’S technology is based on genetically re-engineering autologous cells (patient’s blood), expanding the re-engineered blood cells, and injecting them back into the patient with SCD or MDS. This patented process is based on using adult stem cells to test SCTI’s science and, if successful, would be the first real breakthrough in the treatment of SCD and/or MDS that would provide relief to millions of suffering patients world-wide. There is an estimated total patient market in the United States of 80,000 for SCD and 45,000 for MDS. SCTI’s technology addresses a direct market of 60,000 SCD patients, which accounts for an estimated $584 million annually in patient treatment cost. The MDS direct market is 36,000 patients.

SCTI strategically identified genetic re-engineering and expanding cells as its two major milestones for proof of concept. The research associated with genetic re-engineering, as it relates to SCD and MDS, will begin upon receiving funding. The research associated with expanding cells is funded with the following research projects currently underway:

• Human peripheral blood derived adult stem cells are being expanded at NASA.
• Human neural progenitor cells are being expanded at NASA.
• The Charles River Laboratory has tested expanding cells using nude mice studies. (The necroscopy results of the mice have all been positive indicating no tumors have been found during these 4 th quarter of 2004 tests).
• Development of protocol to determine the potency and viability of expanding cells

SCTI’s goal is to begin research on genetic re-engineering and then to develop strategic partnering relationships. Strategically, SCTI is determined to partner with a university and/or universities that have established themselves as leaders in SCD and MDS research. Upon funding, SCTI will hire a chief scientist who will manage all of the research and development of the technology.

• The SCTI solution uses adult stem cells, which are not considered by major political and religious groups to be morally or ethically questionable. Therefore, by focusing on the use of adult stem cells rather than embryonic stem cells, SCTI has separated itself from the other more controversial biotech companies.

• The patented technology of expanding cells process allows SCTI to effectively expand “healthy” stem cells many times over, and safely inject these expanded stem cells back into the patients with SCD or MDS.

• SCTI can successfully seek scientific capital and research grants/funding due to the fact that our proposed therapeutic solution is not questioned ethically or morally by any religious or political factions that we are aware of at this time.

• SCTI is developing a process and not manufacturing a drug. There is a major difference in the time and money needed to take a process, not a product, to the commercial market.

• SCTI can use two important legislative acts to its advantage.
  • The proposed SCTI solution for SCD or MDS may fall under the Orphan Drug Act, which could allow the company access to federal tax credits, grants to fund research and clinical trials, and seven years of market exclusivity after FDA approval.
  • Sickle Cell Act of 2003 could aid in providing funding sources for SCTI as the prevention and treatment of SCD patients is one of the cornerstones of this congressional legislation.
    


• NASA scientists manage the research associated with expanding cells through another agreement, the Reimbursable Space Act Agreement (“RSAA”), and are obligated to report within 30 days of any new discovery. The results of that research will directly benefit SCTI.
  


• The cost of SCTI’s process to successfully stop symptoms associated with SCD will be much less than the current cure of SCD, bone marrow transplants.

• There is a high market demand for SCTI’s process regarding SCD and MDS; meeting this need is politically advantageous to the company.

• The caliber of SCTI’s Board of Directors will provide strategic contacts, which will afford this organization opportunity to efficiently penetrate the markets in the United States and other countries throughout the world.

In all probability, SCTI will not realize revenue until year five, therefore an investment in the company is a highly speculative investment. The following are a list of the major risk factors associate with investing in this company.

• Failure to get FDA approval . SCTI currently licenses two (2) technologies under development and in the event that this technology fails to obtain FDA approval SCTI will be forced to identify other technologies to support its research and development.

• SCTI’s research fails to produce an effective treatment. SCTI’s technologies are unproven in humans and, as a result, the company may not be able to successfully develop and commercialize any treatments.

• SCTI is unable to obtain and enforce patent protection for its technologies. Without the protection of patents for its technologies, its ability to develop and commercialize its technologies may be harmed and may not be able to operate its business profitably. If SCTI becomes involved in patent litigation or other proceedings to enforce patent rights, it could incur substantial costs that the company may not be able to recover from to operate successfully.

• The United States market may not be large enough . If the U.S. market fails to provide a large enough target for viable commercialization, then SCTI will be forced to look to the world market. While the world markets are significantly larger than in the U.S., many governments of individual countries strictly manage monies allocated towards healthcare.

• Outside competition. SCTI faces current and potential future competition, which may result in others discovering, developing, or commercializing technologies at a quicker and more successful rate.

There are three potential revenue streams for SCTI should the technology prove to be a dynamic solution for SCD and/or MDS. They are: (1) Licensing fees paid by the Pharmaceutical and/or Bio-tech Distributors, (2) Royalty payments paid by hospitals and treatment centers to the licensed distributors that will use the technology, and (3) Other compensation based on fees established contractually and/or royalties from future research that utilizes SCTI’s technology. The financial goal of the company is to realize revenue from these opportunities by year five. While stem cells are extraordinarily important in early human development, multipotent stem cells are also found in children and adults. For example, consider one of the best understood stem cells, the blood stem cell. Blood stem cells reside in the bone marrow of every child and adult, and in fact, they can be found in very small numbers circulating in the blood stream. Blood stem cells perform the critical role of continually replenishing our supply of blood cells — red blood cells, white blood cells, and platelets — throughout life. A person cannot survive without blood stem cells.